for you right i'll see you monday. hey, larry, what do you have for us? >> jimmy, the election is dominating stocks right now. good evening, everyone. i'm larry kudlow. this is the kudlow report. our top story this evening, four days before election day. and the race between president obama and mitt romney could not be any tighter. >> four more days! four more days! >> all right. the president today telling his liberal supporters that the mere mention of governor romney to exact revenge. >> no, no, no. don't boo. vote. vote. voting's the best revenge. and thank you, again, vice president joe biden, for yet another gift. >> there's never been a day in the last four years i've been

proud to be his vice president. not one single day. not one single day. and we ask a key question tonight. is hurricane sandy so much worse with the loss of life and incredible suffering covering a third of the country? is that going to put voters in an angry, frustrated and ugly place? so much so that it damages president obama's re-electionesre-electio re-electionest. we begin tonight with breaking news. after a friday filled with fury, michael bloomberg gave into the criticism and canceled the ing new york city marathon scheduled for this sunday. let's go live to cnbc's brian shactman with the latest. good evening, brian. >> reporter: hi, larry. as late as midafternoon mayor bloomberg was adamant that the race would go on. preparations were moving forward from the equipment to people signing up. but basically the negative

momentum swung actually early this morning with the publication of a front-page article in the "new york post" about the huge generators that were being used to power the new york city marathon in central park. there was actually a third generator sitting idle. all three of those could have been used for recovery efforts. well, it exploded on twitter and facebook and eventually public figures came and spoke out against this. this afternoon, later in the day there were meetings and major bloomberg, canceled, didn't postpone but canceled the marathon. here are some of the statements from the mayor's office. while holding the race would not require diverting resources from the recovery effort it is clear it has become the source of controversy and division. we cannot allow a controversy over an athletic event to december tract attention away from the critically important work being done to recover from the storm and get our city back an track. the people of staten island, one of the hardest hit places in the entire country from sandy, there

was relief and emotion. >> thank god. my reaction is, i've been coming to realize that these resources are going to be needed where it's truly needed. >> reporter: the bottom line is the mayor knew there was 350 million in economic benefit to the race, and also thousands had already come to the city to run the race. but the image of starting the race starting it in staten island where people died and it's still a mess, it would just be something that could actually tarnish his entire legacy, larry. and you know the mayor probably did not want that. >> you know, brian, first of all, thank you for your report. a tough report. how about the people that have already come to new york city? have donated their fees into these trailers? why not take it out and donate it to the people of staten island and elsewhere where literally young children have died? >> reporter: the race has already committed $2.5

million-plus to the recovery effort. they asked racers to donate $26.20 to thee esffort as well. some of those spent thousands of dollars to come here. we spoke to several runners who already decided not to run but were going to go to staten island to bring supplies and instead of running spend their entire day toward the relief effort. i think there's a real opportunity here to turn it into something like that. there needs to be a group that can organize it. there are a lot of people here now with nothing to do all day on sunday and probably a pretty good idea. i'm sure something will happen. >> all right. great. thank you, brian shactman. we appreciate the great reporting. so the other marathon, the presidential campaign, moves into its final frenzied weekend with obama and romney sparring on the such over the economy. well, supporters are working on getting out tuesday's vote. john harwood has been watching all of it. good evening, john. >> reporter: larry, as they crisscross the battleground states the presidential candidates got one last fresh piece of economic data before tuesday's election. that was the october jobs

report. it was better than expected which allowed president obama to deliver a message of how far we've come. >> in 2008 we were in the middle of two wars and the worst economic crisis since the great depression. and today our businesses have created nearly 5.5 million new jobs and this morning we learned companies hired more workers in october than at any time in the last eight months. >> reporter: as you'd expect, larry, mitt romney stressed the opposite case which is unemployment today remains higher than it was when president obama took office. >> he said he was going to lower the unemployment rate. down to 5.2% right now. today we learned that it's actually 7.9%. and that's 9 million jobs short of what he promised. unemployment is higher today than when barack obama took office. think of that. >> reporter: of course, the question is, how much any of that messaging matters. so much of the vote has already been decided in the minds of individual voters. so that what matters is the calls being made at this afl-cio

phone bank trying to get their supporters out to vote, business, u.s. chambers doing exactly the same thing for the republicans. we're going to know on tuesday which side was more successful, larry. >> all right. john harwood. many thanks for that. now president obama and mitt romney are crisscrossing the country in these critical final four days. obama's going to visit colorado, iowa, wisconsin, ohio, virginia, new hampshire, and florida. and an almost identical tour for romney excepts he swaps florida in favor of, get this, pennsylvania. very interesting. now you're going to be looking, there it is, live pictures of westchester, ohio, where a mitt romney rally is under way. tens of thousands there, and lines to come into the rally stretch out for six blocks. this is interesting. does team romney see an opening there? let's talk here now is democratic strategist robert shrum, columnist for "the daily

beast" and ed rogers, republican strategist and former bush 41 deputy assistant. gentlemen, welcome back. >> good to be here. >> i want to begin with this thought. not the jobs thing. the jobs thing is too inconclusive. what is so interesting is the aftermath, the immediate aftermath of the hurricane has turned out to be far worse, difficult. people die. gasoline lines. 1970 style stuff. somebody has to bear the blame for that even though it may be unfair. people are in an ugly mood about the aftermath of this storm, bob shrum. might that be an unexpected, unforeseen negative for president obama? >> i suppose you really have to be pulling for mitt romney to come up with that interpretation. i think so far the president's performance in this testified to by republican governor like chris christie has been superb.

he will continue to move assets here. trucks were going to drive across the country to help in thork ci new york city. instead the president sent huge air force planes and brought them here. this is going to take some days, some weeks to straighten out. people have a good sense this guy is in charge. who would have thought that the october surprise would turn out to be chris christie who keynoted the republican convention, looked at what the president was doing, said he was incredible. if you saw it today, they asked are you still in contact with the president? he said, i'm talking with the fema guys all the time, they're doing everything they want. >> i think that's right. i acknowledge that on the show, bob shrum. i want to go to my friend, ed rogers. >> hey. >> that's when obama was on the beat. first he was in the white house in the oval office. then he traveled. then he walked with chris christie. okay. he was doing his job. now he's back on the campaign trail. i point i'm making, ed rogers, is this. the aftermath, you know, sandy is officially over. whatever that means. but the aftermath has been

brutal. much more brutal than people thought. and it extends to almost a third of the country, ed. and somebody often takes the blame who shouldn't take the blame. obama's campaigning. who's taking care of these kids? >> sure. >> in staten island who horribly, tragically, have lost their lives? >> well, you say it's horrible, and in politics, bad gets worse. and natural disasters follow a certain political pattern. at first people want the sheriff and the sheriff has to come to town and restore order and maintain peace and rescue people. now they kind of want the nurse and there's no possibility people are happy with the services they've been getting. that's not obama's fault. however, it will -- it will hurt him politically. it will hurt him politically in pennsylvania, in philadelphia, in ohio. it's not a net plus. no way. and they can't hide behind chris christie. chris christie's doing a good job, saying what he has to say, and done good by obama by

telling the truth. but the fact of the matter is nobody's going to be happy tomorrow and sunday and monday with the level of services they're getting. >> there you go. >> could be bad for obama. >> bob shrum, i read your notes carefully. you're plmocking the idea mitt romney could take pennsylvania. i'd take that mocking back. pennsylvania is a real battleground state and that's why romney's spending time there. >> it's in play. pennsylvania's in play. >> you have two hopes. your first hope is people will blame the president for the aftermath of the storm. >> they will. >> i think that's untrue and happy. your second hope is pennsylvania, which is always fool's gold for the gop. ed could tell you if he was being honest going all the way back to george h.w. bush in 1992, the republicans take a run into that state at the last minute. and they never carry that state. there are fundamental structural problems for them in pennsylvania. i think that what's happened here -- >> they're putting a -- >> he can't carry ohio.

he can't crack ohio so he's searching for pennsylvania. >> hold on, buddy. unlike past years, look, i understand there have been saints, particularly in 2008, into pennsylvania, which makes no sense at all. i happen to agree with you. now a fortune from superpacs is being put into pennsylvania and being followed up on the ground with romney going there. bob shrum, that's what makes it more interesting. and i want to let ed continue. that's what makes it more interesting. >> you know, in pennsylvania they elected a republican senator in 2010 and they've got a republican governor. so it's not completely foreign territory. >> 2010. a presidential year are quite different. and you know it, ed. >> that's right. it's been tough for us since 1988. but that said, it's in play, bob. and you know. >> well, it better be in play, because otherwise mitt romney has no room to 270 electoral -- >> you're wrong about that and you're just making that up. >> i'm not making it up. nate silver in "the new york times," 80% chance the president gets elected. >> look at "the new york times,"

that's -- >> nate silver is one of the best statisticians in the country zbloo country. >> he's good but he's faking it right now. >> you think all the numbers that aren't good for you are fake. >> i got to get out. shrum, including you, including me, including ed rogers. i just want to clarify something. what i'm calling the nasty and angry aftermath of the hurricane, i am not blaming that on president obama. i'm not. what i'm saying is, though, there is kind of an ugly mood out there. it does stem from the hurricane. and you -- this thing with the gas lines and the kids dying and all the other strategies has turned out to go on longer and it has been uglier. >> it's going to get worse. >> it's going to get worse. >> it may get worse. i'm just covering it really as a reporter. i'm not blaming balobama. he may take the rap.

>> we got to go. gentlemen, thank you very, very much. i appreciate it. roger shrum, ed rogers. good stuff. cnbc your place election night. we'll be covering this race right town to the wire. our special coverage begins tuesday at 5:00 p.m. thanks to bob shrum and ed rogers from the prior segment. later on, romney's secret voting bloc. get this, evangelicals. you won't believe how they could carry ohio and other states for romney. and coming up, six hour gas lines. this is another problem in the aftermath of the hurricane. there's rationing at the pump. raising tempers past the boiling point. how did we end up back in the 1970s? folks, don't forget free market capitalism is the best path to prosperity. don't regulate these utilities so much. let them charge free market prices. it would have been easier to get through this crisis. i'm kudlow. we'll be right back. this is america.

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welcome to the world leader in derivatives. welcome to superderivatives. once again, you're looking at live pictures from westchester, ohio, near cincinnati. where mitt romney is set to deliver his campaign's closing message to thousands of supporters later this hour.

you can see former new york city mayor rudy giuliani knocking it off right now in preparation for mitt romney's speech. so, of course, with just four days until election day, the romney campaign is looking to fire up its base as well as courting independents. but as "the wall street journal" recently suggested evangelical christians could be the secret voting bloc that puts romney over the top. this from a column by deputy editorial page editor, dan henneger. we welcome century strategy ceo ralph reid, founder and chairman of the faith and freedom coalition. good evening, ralph. ralph, as i understand it, you believe a resurgent evangelical vote can take over ohio, pennsylvania, and wisconsin, three massively important states. >> well, and i would also, larry, add iowa to that mix. and i think it's a big reason

why north carolina, which obama carried four years ago, as you know, has moved off the table. i think it's a big reason why the safe betting today in both parties is that florida is moving away from obama. the evangelical vote is 44% of the vote in north carolina. that state is now gone. he was the first democrat to carry it in 44 years. romney will carry that next tuesday. in ohio, 30% of the vote. but here's the real key, larry. it's what makes '12 different than '08. four years ago there were 17 million evangelical christians who didn't bother to go the polls. about half because they weren't registered to vote. half were registered but didn't vote. we estimate that 340,000 of those were in ohio, alone. this is a state that obama carried with only 262,000 vote

margins. so if they show up, it's going to be a big factor that wasn't there four years ago. >> why is no one else covering this, ralph? you've got hard numbers. first of all, first of all, you're talking about wisconsin and iowa as well as ohio, as well as pennsylvania. i mean, romney, that's landslide territory. what i want to ask you is this. why doesn't the press understand the story that you're telling, and to some extent, the work you've done? dan henneger did that absolutely. why don't they get that, ralph? why don't they talk about that? >> there has been a fair amount of coverage. front page story in "the new york times." there's been broadcast coverage. fox news has tone done it. there's been coverage of it. the main reason why, larry, is just this t-- it's not a new problem. it's a systemic problem that a lot of these voters are located in what the dominant media would

call flyover country. 47% of this vote is in the south. 27% of this vote is in the heartland of the country, in the midwest. and it's the largest single voting bloc in the electorate today. it's going to be one out of every four votes next tuesday. and if you look at the numbers, this is the extraordinary thing, larry. if you look at the numbers right now, in "the wall street journal"/nbc news poll, today mitt romney is winning 77% of that vote. that's only 1% lower than george w. bush who was an evangelical christian got in 2004. so you may have the first national ticket in american history without a protestant on it. you've got a mormon and a catholic who may get more evangelical votes than anybody in u.s. history. >> interesting. very interesting. one last one, in the dan henneger article, he cites, quotes you directly that paul

ryan, putting paul ryan as you just suggested, a catholic, will actually fire up the evangelical vote. >> no question about it. you know, paul ryan is mostly known for his work on the budget, for his plans to reform and save medicare. and he's mostly known for his stands on fiscal issues. but you know very well, larry, that paul ryan is a serious and devout and faithful catholic. he takes his faith very seriously. he wrote an open letter to the catholic bishops defending his budget. according to catholic social teachings, specifically solidarity and subsidiarity which states that help for the poor and the needy should be at the point closest to the need and should not be bureaucratic. he's pro life. he's pro marriage. he's pro family. i'll tell you this, on economic issues, as well as cultural issues, when mitt romney picked paul ryan, he made it clear that he was not comfortable to just

be the anti-obama. that he wanted to lean forward and have a reform-oriented, forwar forward-leaning campaign. a real alternative. >> a statement of principles. the candidate of change. that's really what you're s suggesting backed by this new wave of evangelicals. ohio, pennsylvania, wisconsin, iowa, that is really powerful stuff. we'll watch it all on election night. but if you are right, this race may be stronger for romney than anybody believes possible. anyway, thanks to my friend, ralph reid. we appreciate it very much. >> thank you, larry. coming up on kudlow, six hour gas lines and the fight for fuel after superstorm sandy. you know, it's looking like the old arab oil embargo days of the 1970s. that's next up.

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the power has come back for some 65,000 people in new york city, but at least 3 million people remain without power four days after hurricane sandy struck the eastern seaboard. one company coming to the rescue, decatur utility. they report their nonunion electric crews from right to work state of alabama were actually strong armed into joining the union before working on relief efforts. electric companies in the battered area and the unions

deny this. anyway, gas stations seen in the tri-state area, looks like the arab oil embargo days of the 1970s. remember those long lines? odd and even days, the last digit of your license plate determined which day you could buy gas. we've got two reports. weather channel storm tracker jim cantore on the out of control gas lines in northern new jersey. and our kate kelly in new york harbor. thats go, g s ggas got to come pump some place. most of it will be by barge. jim, are you getting a '70s feeling out there? i've seen the lines. just driving up here to global headquarters. what's going on? >> reporter: well, remember back then, larry, we were talking about ands that got, what, 7 to maybe 11 or 12 miles to the gallon. so getting that gas once you got it didn't go very far. that's for sure. look behind me here. this is actually a pretty well

oiled machine here, no pun intended. off in the distance see yet another tanker. they've already put 25,000 gallons in the ground and continue to pump it out tonight. lines have not gotten any shorter as you can imagine. when people find out how well this is going the lines are going to get even longer. the officers over here, they're taking the traffic and putting them in the lines so nobody has to get confused and honk horns at anybody else. then you can see here where people are exiting off the new jersey turnpike and coming around here in this line where the police obviously have some order going on in through here before people actually get the, if you will, final approach. this has gone very, very well in ridgefield. they've had many, many customers and as i mentioned 25,000 gallons-plus now continuing to put into these pumps. there's no limit. unlike other areas. some areas are limiting five, maybe ten gallons. >> tell me about the no limit, jim. that is different than the 1970s when we had limits. you're saying they're pulling up, the gas is there, the power

is working, they can fill her up and there's no problem? >> reporter: there's no problem. everybody can get as much gas as they want. what i haven't seen here are cars and trucks coming in with five gallon tanks on top of their car or back of their truck. nobody is getting greedy. everybody wants their fair share of gasoline. in outlying areas away from the interstate, small towns, people are walking up with five gallon canisters strapped on a rope around their shoulders and taking their ten gallons and running with it because there's a lot of limits at these stations. and i'll tell you, these lines go for miles and miles whether they be cars, and/or people, it's just a rough situation throughout the northeast. >> but i take it from your reporting, okay, there's a lot of cops around. they're keeping the order. i take it this whole process is peaceful. because as somebody who remembers the 11970s. i was there in new york city. we had a lot of violence, we had a lot of violence, jim, on the gas lines. >> reporter: larry, i'm telling

you, don't think this is way it is everywhere. there aren't police patrolling every single gas station that's operational. remember now, if we had power i think this whole situation wouldn't be as bad as it is because let's just take new jersey, for example. 75% of the stations here in this power-out zone either don't have gas or power. so that's keeping a lot of these stations out of it. even if gas comes in, we still need power to pump the gas out. >> all right. we're going to leave it there. thank you very much, jim cantore, for that report. look. some of the gas going to jim's turnpike station is refined in the new york area and moved by truck. bull but much of the gas that arrives in new york area comes by barge or tanker. sandy's surge closed the harbor, crimping supplies. it's coming back online slowly. we go to kate kelly for that part of the story. good evening, kate. >> reporter: hi, larry. we're looking at new york harbor where things are gradually coming back to life about a week after the coast guard shut this area down. yesterday, however, they opened the port of new york and new jersey to boats for the first time since saturday with a

special aim in mind, bringing gasoline and diesel to new york for a much-needed replenishment of empty fuel stations. there was an influx of barges bringing petroleum products in the afternoon, i'm told, followed by additional traffic this morning. the opening of this harbor and today's news of the jones act waiver are steps in the right directions to replenish gas supplies. officials tell me we could be facing weeks of shortages nonetheless. back to you, larry. >> many thanks to cnbc's kate kelly. coming up on kudlow, today's mediocre jobs report underlicense our slow recovery. how can we do better? bob reish is going to square off against casey mulligan. we'll see what they have to say. some different points of view. , producing cleaner electricity, putting us to work here in america

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welcome back to "the kudlow report." i'm larry kudlow. in this half hour as the east coast rebuilds from the devastation of hurricane sandy, bigger government is not necessarily better government when it comes to helping states come out of natural disasters. also tonight, you saw it today. investors are clearly influenced by tuesday's election. the dow is down 140 points. we talked election markets. mediocre jobs report out today

inch inches unemployment rate up to 7.9. still far from full employment. so far from full employment. who's to blame for not getting it exactly to full employment? well, here now is robert reich, former labor secretary and cnbc contributor. and he's the author of "beyond outrage." we also welcome back casey mulligan, professor of economics at the university of chicago and author of "the redistribution recession." casey mulligan, i have seen estimates that say we are 15 million private sector jobs short of where we ought to be under a normal growth economy. why is this? why are we so far from full employment? >> well, there are, of course, a lot of factors but the biggest ones would be really the massive expansions of safety net programs that have happened in the last four years. and they've obliterated incentives for individuals to work and businesses to hire.

and they penalize success and penalizing success is a way to put people out of work, not a way to put them back to work. >> casey, let's give me an example before i get to bob reich. give me an example of the safety net program sthat that is a disincentive to work. >> the food stamp program has been expanded greatly. you can now -- now you can get that when you're out of work. they don't really check whether you're genuinely poor. you're out of work, your income's low for a little while. you can be on food stamps and can stay on there as long as you need. >> so, bob reich, you heard professor mulligan. what's your response to that? he says we're paying people not to work, the safety net is too large and that is damaging our efforts to create jobs. how do you see it? >> in the immortal word of joe biden, malarky. look, first of all, let's just look at the job report. i mean, this is a terrific job report. over 180,000 new private sector jobs. set was revised upward and august has been revised upward.

consumer confidence is up. housing prices are up. and larry, you are one of the world's greatest optimists. i don't you what you're talking about. why aren't you optimistic? things are coming up roses. for before mulligan to complain about too many people still being on food stamps, those are countercyclical programs. we've had them in place like unemployment insurance because we need them. when people need them, the economy needs them, it's good for people to get this kind of safety net when they are down. and as the economy goes up there will be fewer people on unemployment insurance and food stamps. >> i like to be opt iimist. get back in touch with your inner optimist, larry. >> i'm in touch with my inner optimist, i appreciate it, robert reich. i believe at this stage in the game coming from where we've been we should be printing 250,000, 300,000 jobs. that's what we should be doing.

he says it's just a safety net, casey. is it really a safety net? >> he's misleading us. food stamps have been there for a long time but totally changed the rules. able-bodied people used to be required to work to be on the program. the obama administration eliminated that. they've changed the rules and that has allowed many, many people in. a big example i'd like to look at is unmarried people. for some strange reason, unmarried people have fallen much farther below unemployment than married people. they have a lot better access to these programs. >> have the work requirements been removed, casey? is that a problem? the work requirements? is it too easy to go on safety net programs? >> that would be one of a dozen things that has happened. that's one of the factors. >> may i respectfully interject here? i don't know what professor mulligan is talking about. there's still three people looking for every job opening. when you have three people looking for every job opening you want to have safety nets there for people.

it's not only fogood for the people but puts money in their pockets to buy things and keeps other people employed. this is economics 101. >> now there are millions of people who can make just as much by not working. that's a bad situation. >> i want to know which states and which localities professor mulligan is actually talking about because every state i know of, it actually is better for people to be working for themselves. i mean, they will make more money working than they will on unemployment insurance or with food stamps. in fact, a lot of people i hear from and a lot of the surveys show in almost every state, the level of unemployment and food stamps together and every other thing you can get is lower substantially than what the median wage is or what even the minimum wage is. >> casey mulligan, i just want to ask you, the unemployment rate has gotten itself down to 7.9%. okay. it ought to be 4.5% if you ask me. at least it's 7.9%.

what are we doing regarding 99 week unemployment insurance compensation, for example? what are we doing regarding the possibilities of mandates and health care mandates for obama care? in other words, if things are improving, as robert reich says, why are we still supporting this big safety net with no new mandates to come? >> you're asking me a political question. i'm an expert on the economy. i'll tell you why the economy is down, why politicians are trying to hold it down, ask the political expert. >> tell me in economic terms. in other words, i thought you were having countercyclical. robert reich is talking about kou countercyclicals. the unemployment rate has come down to just under 8%. shouldn't safety net programs be automatically pulled back? it seems like that's not happening this cycle. and i want to know why.

>> they made a new set of rules and they are rules that two on indefinitely. they modernized eligibility for unemployment insurance to name one of a dozen. there's no plans to unmodernize it. modernize means letting a lot more people in who don't have strong attachments to the workforce. >> here's something, mr. mulligan, professor mulligan has an important point. there are a lot of people now who are less attached to the workforce than they used to be. we have about almost 14% to 18% of our workers are contingent workers. part-time workers looking for full-time work or are self-employed. some of these people in a very down economy would not have any work were it not for a little bit of liberalization of unemployment insurance and food stamps. i think personally we didn't go far enough in that direction. i think that's one reason a lot of people don't have the money to keep the economy going. but let me just say, we want to be celebrating. larry, you want to be celebrating these unemployment numbers. shame on you for not being more optimistic tonight.

>> i'm sorry. i can't get that optimistic tonight. i think you should be doing 3 0 00,000 jobs a month. casey mulligan's points that the social safety net program, eligibility has been expanded so much, they no longer represent the countercyclical fiscal aid in bad times. >> that's baloney. that is just -- >> governments and market run amok, but robert reich, i didn't expect you to agree with me and you didn't and casey mulligan, it's terrific to see you again from the university of chicago. thank you, gentlemen. coming up on "kudlow" wall street is on election watch. investors take no comfort in obama's rather mediocre jobs report. bob reich notwithstanding. question is, are polls waiting on a romney victory or not? that will be next up.

all right. let's do a little stock market work. what a week on wall street.

jobs were up, markets town. investors seemed to take no comfort if obama's last mediocre jobs report although it did pass expectations. i'll grant you that. question is, are the bulls waiting for a romney victory? is that what it's going to take next week? let's talk to our friend, jeff. chief market strategist, very distinguished investor. jeff, just sort of quickly, you had a little bit better jobs report today. markets went down. why? >> i think there were a number of things going on in the background, larry, but what we've seen lately, there's a lot of attention focused on the presidential race, it appears republicans' prospects for taking the senate have slipped and i think this issue of the lame duck session and the fiscal cliff is one really that's going to come down to what congress does and that is looking less feasibly -- you've got a congress that's probably still going to be divided after this election potentially. >> yes. >> which loads to just acrimony

and pain. we all know what happened back in august of last year when we couldn't get that debt ceiling increased. >> absolutely agree with what you just said. it's funny we were talking about that tonight before the show started. the prospects for republican takeover of the senate. even if romney wins the white house. the senate prospects have deteriorated which means more gridlock, more fiscal cliff, more god knows what. higher capital gains taxes. higher dividend tax rates. all things that are antithetical to the stock market. are they not? >> absolutely true. and, you know, lately in the last few months we've seen the unemployment rate in some of the key states that republicans need to hold like maine, they've gone up. that's going in the wrong direction. i don't know to what extent they hold the current senator responsible for that. certainly it creates a sense of discomfort with the incumbents and possibility of change there. so, you know, those odds have really changed and that's just a huge big deal for next year. the markets do not like a

divided congress and we've got so much at stake in the lame duck session, it's a major issue for the markets and one clearly i think investors are voting with their feet and getting out of the way. >> jeff, why did gold crash today? >> you know, it had to do with the dollar going up. had gold down, silver down, oil down, copper down. they were all down. i think the dollar went up on a little bit of the safe haven trade. money coming out of stocks into safe havens like treasuries, into the dollar. that has something to with the backdrop today of what's going on with the election. also had something to do with what was going on overseas with greece and maybe some of the issues. later in the day regarding financial services company and potentially a rogue trade. so that fear onlying ba incomin into the market wroprompted morf a rally than the dollar. >> you don't think some people in the market looked at the numbers and said the fed won't be as easy and therefore started dumping gold which is the ultimate easy money hedge? >> yeah.

neglected to mention that. you make a good point, larry. lately we've seen a lot of thoughts about how long is the fed going to remain pinned to this policy, and maybe today's stronger number? a number well ahead of even the highest economist estimate. >> yeah, look, i think we should be knocking out 300,000 jobs a month. that was the reagan recovery many years ago where i worked. but there is a difference, jeff, between let's say 60,000, 90,000, 100,000 jobs and 180,000 jobs and whether that difference will affect the fed, i don't know. i wonder whether some people expect it to. >> yeah, i mean, the fed outlined a sustained improvement in the labor market is what they need to see and this is at least a step in that direction. so it does suggest, larry, you're right, maybe the fed might not be as stimulative on their operation -- qe forever let's call it, and that may result in maybe a higher short-term rates and attractive

environment for dollar deposits. >> all right. very distinguished investment guru. as always, jeff, great to see you. all right, folks, we've been telling you about the gas lines stretching for miles in the northeast. well, this just in. the obama administration realizing it will be in political trouble if it is blamed for gas shortages. just before this election. they have just authorized the defense logistics agency. that intended to buy up to 12 million gallons of gas. and 10 million gallons of diesel fuel to distribute in new york, new jersey, other communities. they're going to coordinate it with fema. i said earlier in the show it may not be president obama's fault, but the aftermath of this hurricane story may be blamed on him. obviously he's taking action to try to get out from under that blame. so tonight after the break, we're going to continue on this very story. who should pay for superstorm

sandy's mass destruction? states or the federal government? president obama's encouraging fema to pick up the entire tab. what about local officials who really know their areas best? the full story coming up next. president obama: there's just no quit in america... and you're seeing that right now. over five million new jobs. exports up forty one percent. home values... rising. our auto industry... back. and our heroes are coming home.

we're not there yet, but we've made real progress and the... last thing we should do is turn back now. here's my plan for the next four years: making education and training a national priority; building on our manufacturing boom; boosting american-made energy; reducing the deficits responsibly by cutting where... we can, and asking the wealthy to pay a little more. and ending the war in afghanistan, so we can... do some nation-building here at home. that's the right path. so read my plan, compare it to governor romney's... and decide which is better for you. it's an honor to be your president... and i'm asking for your vote... so together, we can keep moving america forward. i'm barack obama and i approve this message.

welcome to the world leader in derivatives. welcome to superderivatives. fema's about to run out of

money. there are some people who say to it on a case by case basis, some people saying we're learning a lesson here the states should take on this role. >> absolutely, every time you have an occasion to take something from the federal government and send it back to the states, that's the right direction. and if you can go even further, and send it back to the private sector, that's even better. instead of thinking in the federal budget, what we should cut, we should ask ourselves the opposite question. what should we keep? >> all right. that of course is mitt romney. it was last year saying we should let states decide about disaster relief. as usual, president obama wants the federal government to pick up the whole tab and then some. my next guest says disasters create not better government, but bigger government. okay. i want to bring in author of "the forgotten man," a new history of the great depression. i'm not a poopposed to the -- catastrophic natural disasters. we need some help.

i want to read this and get your take. regarding fema and this cash spending. under ronald reagan they did it 28 times. okay? under bill clinton, another two terms, 89 times. under george w. bush, they did it 130 times. and under barack obama, who hasn't served a full term yet, it's already up to 153 times. that suggests we're out. fema-izing ourselves if there is such a word. >> you want to be careful with that data. there's a very big year in there, 2011. yes, larry, the trend is upward. once you create an entity like fema you use it a lot. it's a toy. right? the more we say rescue emergency, the more we get used to doing that. that's been a trend in our culture. the weather hasn't gotten that much worse since world war ii, say, to correlate to the number of disasters we claim and call now. so that's a problem. >> so what about -- in all

seriousness, about state, local officials? romney makes a point. i don't think romney's saying get rid of fema. i didn't hear that. romney makes a point the governors and mayors and whatever, the town councilmen, they know best how to get things done. why are they losing their power? why is fema and the federal government getting so much more power? >> well, it's its own kind of flood isn't it, larry? we say this is the new normal. higher water, federal spending. we have another emergency and raise the water again. we're up to federal spending now that's far beyond what we had traditionally, right? not just 15% or 18%. not 20% but more. so we get in the habit that that's part of it. and one of the things i have been looking at lately, what that does to the mood of the city, if you want to pull it psychologically, larry, to the fear part of the brain. are we safe? rather than to the opportunity part of the brain, what can we do? we get in a situation whereas now we think only about the bad

side of this event and going to take a very long time to get to the opportunity. >> look, natural disasters are not new. we didn't just invent them. again, i'm saying with something like sandy, sandy requires fema help. yes. i agree with that. question is, how, when, where and why and how? down through our history your column says the united states has had a different structure and more federalism and more use of state and local government. >> absolutely, larry. this is a "bloomberg" column that says, goes back to prewar and notes when we had a crisis often the red cross would lead it. the red cross would have the moral support and organizational support of the government, but the red cross would lead and go down. there was a very famous flood in "forgotten man" and my new book "the biography of coolidge," the flood of the mississippi. it was terrible. the president did not go down. that was coolidge. why not? he wanted the states and the private sector and the charities to take the lead.

>> i got to leave it there. we're going to finish this conversation on the radio tomorrow. that's what we're going to. we're going to have more time. that's terrific. thanks. that's it for this evening's show. thanks for watching. stay tuned for an nbc special telethon for the victims of hurricane sandy, hosted by matt lauer, bruce springsteen, jon bon jovi.